United States v. Swift & Co.

• Decision Date: 08 September 1942
• Docket Number: No. 9513.,9513.
• Citation: 46 F. Supp. 848
• Parties: UNITED STATES v. SWIFT & CO. et al.
• Court: U.S. District Court — District of Colorado

46 F. Supp. 848

UNITED STATES v. SWIFT & CO. et al.

No. 9513.

District Court, D. Colorado, at Denver.

September 8, 1942.

Thurman Arnold, Asst. Atty. Gen., of Washington, D. C., and Thomas J. Morrissey, U. S. Atty., James McI. Henderson, and George B. Haddock, Sp. Assts. to Atty. Gen., and Sheridan Morgan, E. Compton Timberlake, and Joseph J. Cella, Jr., Sp. Attys., all of Denver, Colo., for the United States.

Van Cise & Robinson, of Denver, Colo., for Swift & Co., John Holmes, Paul C. Smith, and S. M. Weir.

R. F. Feagens, of Chicago, Ill., and John R. Coen, of Denver, Colo., for Armour & Co., George A. Eastwood, Walter A. Netsch, and Thomas J. Tynan.

Robert G. Bosworth and C. C. Dawson, Jr., both of Denver, Colo., for Denver Union Stock Yard Co., J. A. Shoemaker, and L. M. Pexton.

Silverstein & Silverstein, of Denver, Colo., for Denver Live Stock Exchange, Denver Sub-Committee of the Joint Marketing Improvement Committee, Associated Live Stock Commission Firms, A. A. Blakley Live Stock Commission Company, Hinie Klecker, Denver Live Stock Commission Company, Drinkard & Emmert, Inc., Mike Hayes, A. A. Blakley, Louis J. Reed, Milton M. Mann, Andrew K. Miller, Russell Wilkins, J. J. Drinkard, Charles G. Smith, Ralph B. Herrick, Ralph S. Blakley, J. D. McKee, and William H. Hilbert.

Grant, Shafroth & Toll, of Denver, Colo., for Cudahy Packing Co., G. E. Robertson, and G. R. Clark.

SYMES, District Judge.

I have paid unusual attention to the arguments of counsel, engaging in considerable colloquy with them in an attempt to find out the basic issues of the case, to see if I could decide the demurrers and motions at the conclusion of the argument. I also read last night a good many of the authorities cited in the briefs, and have reached certain definite conclusions as to the law.

The government's contention is briefly set forth on page 25 of their brief, where they state: "The gist of the charge is that the defendants who control a major part of the purchase and sale of fat lambs at the central marketing point have agreed with one another that they will no longer purchase at or near the points of production, but will confine their purchasing to the central market. The question then is narrowed to whether or not a group of purchasers and others interested in the advancement of the Denver central market can agree among themselves to refrain from one type of marketing and to deal exclusively by means of another type of marketing. Whether the conspirators thus can by agreement deprive the purchasers of the right to choose whichever method of distribution they may seek, and to deprive the producers and sellers of the right to market through any channel other than the central market."

It has developed in the course of the argument that the defendants are all purchasers at various times of fat lambs, of which over a million and a half are produced in Colorado annually and marketed; that there have been in the past two methods of marketing these lambs: First, by the purchasers, those desiring to purchase fat lambs, sending their salesmen into the field, that is, around to the farm where the fat lambs are produced, and making their purchases, or waiting until the lambs come into the Denver Union Stock Yards where they are sold.

The gist of the complaint is really that these dealers, Swift & Company, and Armour, and Cudahy, and others, have agreed among themselves that they will in the future confine their purchases of lambs solely to the Denver Union Stock Yards' stock yards, and that they will refrain from purchasing fat lambs in the field.

It is claimed that such an agreement by these defendants, who are the largest purchasers of this class of live stock, constitutes a monopoly in restraint of trade and in violation of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note.

An examination of the indictment discloses that there is no claim that by this practice the price of fat lambs on the Denver market or elsewhere has been in any way affected, or that any monopoly, except in the second count of the indictment, has been created, or that this practice has in any way affected the price of lambs or the flow of fat lambs into this or any other market anywhere in the United States, or has affected the number of lambs produced for sale in any way.

The government contends in effect that the sellers of lambs, that is, the producers, by this action have been deprived of the opportunity to choose between disposing of their product by so-called country buying, and are compelled, if they want to market their lambs, to send them to the Denver Stock Yards. The Denver Stock Yards has been classed by the Supreme Court in the Stafford case (Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 66 L.Ed. 735, 23 A.L.R. 229) as "a great public utility" designed and conducted for the purpose of affording a channel or means by which the producers of live stock in the West and Southwest can readily dispose of their product. The Court takes judicial notice of the fact that by the law the government has regulated the conduct of these live stock markets so that the seller or farmer who ships his live stock there sells in a supervised market where his stock is honestly weighed, the proceeds accounted for, and the charges regulated, and the whole sales procedure supervised by the government in accordance with the Stock Yards Act, 7 U.S.C.A. § 181 et seq. I fail to see how it can be said that such a practice in any way affects or burdens interstate commerce without the government going further and charging that the price to the ultimate consumer is affected, or that the amount of fat lambs raised or produced, or flowing in interstate commerce is lessened in any way. There is no claim that the prices are fixed, or that the producer gets a less price by selling on the Denver market than he would if the defendants purchased under the country system of buying. The government claims that these defendants have in the past set up a practice for buying lambs which amounts to no more than a regulation of their own method of doing business. Why have they not the right to desist from that method and confine themselves solely to supplying their wants by buying at the public utility market supervised by the government and run for the advantage of the producer?

A very similar case on the facts is the Chicago Board of Trade case (Chicago Board of Trade v. United States, 246 U.S. 231, 38 S.Ct. 242, 244, 62 L.Ed. 683), where the Supreme Court held that it was not a violation of the Sherman Act for the Board of Trade to forbid its members from purchasing or offering to purchase grain during the period between two sessions of the Board, that is, between the adjournment of the Board of Trade in the afternoon and the opening of the market in the morning, at a price other than the closing bid when the market closed the previous afternoon. They further held that a rule or agreement by which men situated as these defendants are, occupying a strong position in a branch of trade, fix the prices at which they will buy or sell during the important part of the business day, is not necessarily an illegal restraint of trade. As the Court there points out: "Every agreement concerning or regulating trade restrains" to a certain extent; "and the true test of legality is whether the restraint is such as merely regulates, and perhaps thereby promotes, competition, or whether it is such as may suppress or even destroy competition."

In the case at bar there is no claim that competition is affected, because the defendants, when they buy lambs in the Denver market, actually compete with each other and other buyers, and the producer has the advantage of that competition which he does not have when dealing with a single salesman at his farm.

In this Board of Trade...